Part 58 (1/2)

”August Belmont & Co., New York.

”Drexel, Morgan & Co., New York.

”J. & W. Seligman & Co., New York.

”Morton, Bliss & Co., New York.

”First National Bank, New York.

”Drexel & Co., Philadelphia.

”June 16, 1877.”

A few days later I wrote the following letter:

”Treasury Department, } ”Was.h.i.+ngton, D. C., June 19, 1877.} ”Sir:--Your letter of the 18th instant, in which you inquire whether the four per cent. bonds now being sold by the government are payable, princ.i.p.al and interest, in gold coin, is received. The subject, from its great importance, has demanded and received careful consideration.

”Under laws now in force, there is no coin issued or issuable in which the princ.i.p.al of the four per cent. bonds is redeemable, or the interest payable, except the gold coins of the United States of the standard value fixed by laws in force on the 14th of July, 1870, when the bonds were authorized.

”The government exacts, in exchange for these bonds, payment at par in such gold coin, and it is not to be antic.i.p.ated that any future legislation of Congress, or any action of any department of the government, would sanction or tolerate the redemption of the princ.i.p.al of these bonds, or the payment of the interest thereon, in coin, of less value than the coin authorized by law at the time of the issue of the bonds, being the coin exacted by the government in exchange for the same.

”The essential element of _good faith_, in preserving the equality in value between the coinage in which the government receives and that in which it pays these bonds, will be sacredly observed by the government and the people of the United States, whatever may be the system of coinage which the general policy of the nation may at any time adopt.

”This principle is impressed upon the text of the law of July 14, 1870, under which the four per cent. bonds are issued, and requires, in the opinion of the executive department of the government, the redemption of these bonds and the payment of their interest in coin of equal value with that which the government receives from its issue.

”Very respectfully, ”John Sherman, Secretary.

”Francis O. French, Esq., 94 Broadway, New York.”

The subscriptions were taken in every part of the United States, and within thirty days $67,600,000 were taken in this country and $10,200,000 in Europe, making $77,800,000 sold. This sum, when applied to the payment of the six per cent. bonds, made an annual saving to the people of the United States of $1,556,000. Since the 1st of March, 1877, there had been sold under the refunding act $135,000,000 four and a half per cent. bonds and that amount of six per cent. bonds was paid off and canceled, thus saving to the people of the United States $2,025,000 in coin each year. The aggregate reduction of interest by both cla.s.ses of bonds from the 1st of March to the close of the popular loan, was $3,581,000 a year in coin. This was regarded as a great success.

Early in July I set out on the revenue cutter ”U. S. Grant” on a visit of inspection along the north Atlantic coast, accompanied by the chief of the coast survey, the secretary of the lighthouse board, the superintendent of the life-saving service, and the chief of the revenue marine service, and also by Webb Hayes, the son of the President. We visited the life-saving stations along the New Jersey coast. I was deeply interested in this service, which I regard as the most deserving humanitarian branch of the public service. We also visited some of the leading lighthouses along the coast and the princ.i.p.al customhouses between the Chesapeake Bay and Eastport, Maine. We were everywhere received with great kindness and many social courtesies were extended to us, especially in New York, Boston and Portland. This outing was a great relief from the close confinement I had undergone since the 4th of March.

The information I gathered as to these branches of the service, with which I had not previously had much acquaintance, was of great value to me. Such trips are sometimes treated by the press as ”junketing” at the public expense. This is a great error. Each of us paid his share of the expenses and the vessel only pursued its usual course of duty. I was brought into close a.s.sociation with these subordinate officers of the department and became informed of their duties, and their fitness for them, and was enabled to act with intelligence on their recommendations.

The only unpleasant incident that occurred on the trip was the running of the cutter upon a rock upon the coast of Maine. This happened in the afternoon of a beautiful day. All the gentlemen with me and the officers of the vessel were on deck. The various buoys were being pointed out and a map of the channel was lying before us. Some mention was made of a buoy that ought to be near the place where we were to mark the location of a rock, but none was found, and suddenly we heard the sc.r.a.ping of the vessel upon the rock. The cutter trembled and careened over. The captain was somewhat alarmed and turned the vessel toward the beach, where it was speedily examined and found to be somewhat injured. We ascertained afterwards that the buoy had been displaced by a storm and that a vessel was then on its way to replace it. The sinking of the revenue cutter ”U. S. Grant” was reported in the morning dispatches and created some excitement; but the vessel did not sustain any substantial injury. We thought it best to leave it for a time to be thoroughly examined and repaired and took another vessel to complete our journey to Eastport, the northeastern port of the United States. From thence Webb Hayes and myself returned to Portland and crossed over the Burlington, Vermont, on Lake Champlain, and from thence went to Saratoga, where we remained a few days, and then returned to Was.h.i.+ngton on the 22nd of July. We pa.s.sed through Baltimore on the day the riots occurred in that city, and soon after heard of the much more dangerous outbreak in Pittsburg.

On the 6th of August I wrote to Mr. Conant as follows:

”Your letter of the 26th ultimo is received. You can safely say to the Messrs. Rothschild that the strikes have been totally disconnected with the government, but grow purely out of a contract between the managers of the leading lines of railway and their employees as to rates of pay.

”The railroad companies have, for several years, competed with each other in a very improvident and reckless way, and are now, and have been for some time, carrying freight for less than cost. This has caused a large reduction of the net income of roads, has led to the loss of dividends, and now to the reduction of wages of employees to rates scarcely sufficient to support life. Hence the strikes.

”The government has been appealed to by both railroads and strikers, by states and by cities, for relief, and has promptly extended it in every proper case, and, without shedding blood, has, in every case, suppressed the riot, and maintained the peace, so that the government is really stronger by reason of these unfortunate events than before. I do not observe that any change has been made by them, either in the price of bonds or in the price of gold, nor in the payment of subscriptions to four per cent. bonds.

”No effort is made to sell the bonds now, nor do I care to press the home market, until enough bonds are sold abroad to provide for called bonds abroad.

”The month of August must necessarily be a languid one, and I do not advise any unusual efforts to force sales.

”Your supplemental cipher was received after your telegram, but was soon found and dispatch made out.”

I no doubt was mistaken in the effect of the strikes upon our public credit. From that time forward for many months there was scarcely any sale of government bonds at any price. The contracting parties informed me that no bonds were then selling in the market and that in New York they were a trifle below par. Practically, for the remainder of the year, government securities were greatly affected in price and value.

CHAPTER x.x.x.

POLICY OF THE HAYES ADMINISTRATION.